Japan’s economy contracted in the third quarter, but the decline was smaller than markets anticipated. GDP fell -0.4% qoq versus expectations of -0.6%. The annualized figure showed -1.8% drop compared with forecasts of -2.5%. The softer-than-expected contraction reflected pockets of resilience in domestic demand despite broader weakness.
Government spending rose 0.5% qoq and private consumption edged up 0.1% qoq, helping to offset some of the slowdown. Public demand grew 0.5% qoq and contributed 0.1 percentage point to overall GDP. However, private demand was a significant drag, falling -0.4% qoq as residential investment plunged -9.4% qoq, subtracting 0.3 percentage point from output.
External demand also weakened. Exports of goods and services fell -1.2% qoq after a strong 2.3% qoq rise in the previous quarter, with net exports contributing to a 0.2 percentage point drop in GDP.
